Calculate the break-even point for each range

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Reference no: EM131857199

A manager has the option of purchasing one, two, or three machines. Fixed costs and potential volumes are as follows:

Number Total Annual Corresponding

of machines Fixed Costs Range of Output

1 $ 9 600 0 to 300

2 $ 15 000 301 to 600

3 $ 20 000 601 to 900

The variable cost if we operate only 1 machine is $10 per unit, but due to economies of scale it decreases to 9$ and 8$ if we operate together 2 and 3 machines, respectively. The price sold per item is $40.

Help the manager determine break-even point for each range. If projected annual demand is between 580 and 660 units, how many machines should the manager purchase?

Reference no: EM131857199

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